Water permeability measured between the airspace and vasculature in intact sheep and mouse lungs is high. More than 95% of the internal surface area of the lung is lined by alveolar epithelial type I cells. The purpose of this study was to test whether osmotic water permeability (P_f) in type I alveolar epithelial cells is high enough to account for the high P_f of the intact lung. P_f measured between the airspace and vasculature in the perfused fluid-filled rat lung by the pleural surface fluorescence method was high (0.019 ± 0.004 cm/s at 12°C) and weakly temperature-dependent (activation energy 3.7 kcal/mol). To resolve the contributions of type I and type II alveolar epithelial cells to lung water permeability, P_f was measured by stopped-flow light scattering in suspensions of purified type I or type II cells obtained by immunoaffinity procedures. In response to a sudden change in external solution osmolality from 300 to 600 mOsm, the volume of type I cells decreased rapidly with a half-time (t_1/2) of 60–80 ms at 10°C, giving a plasma membrane P_f of 0.06–0.08 cm/s. P_f in type I cells was independent of osmotic gradient size and was weakly temperature-dependent (activation energy 3.4 kcal/mol). In contrast, t_1/2 for type II cells in suspension was much slower, ≈1 s; P_f for type II cells was 0.013 cm/s. Vesicles derived from type I cells also had a very high P_f of 0.06–0.08 cm/s at 10°C that was inhibited 95% by HgCl₂. The P_f in type I cells is the highest measured for any mammalian cell membrane and would account for the high water permeability of the lung.